Upfronts 2017: Budgets Coming In; Ad Volume Could Be Lower

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Toward the end of last week, television ad sales executives say they got a good look at client spending plans, and they expect the overall upfront market to be down between 3% to 6%.

With a good share of budgets registered by media buyers, there’s a decent chance deals will start to get done this week, market sources say.

Based on what they saw last week, the broadcast networks will be flat to up a couple of percentage points in volume, while cable networks are down 5% to 8%.

Though the upfront might be down, those ad dollars might not be leaving TV. Media buyers say their clients are looking for flexibility—an ability to spend more opportunistically and not be locked in at a specific time or program.

Related: Study: TV Rates High as Ad Medium

For buyers, holding back dollars now might also have the strategic value of lessening demand in the upfront, which could translate into lower price increases than they had to swallow last year. Given the budgets being put forward by buyers, it appears likely price increases will be smaller in this year’s upfront than a year ago.

Paying a high single-digit increase in the upfront and then another double-digit increase on top of that in scatter was unacceptable to clients, who have been increasingly trigger happy when it comes to firing their media agencies.

Some of the dollars that have traditionally gone to primetime entertainment programming are also being soaked up by sports.

Fox emphasized sports during its upfront presentation saying that with the World Series, college football and the NFL, it owns the fall, a time when consumers are doing the bulk of their shopping.

NBCUniversal also has a big sports portfolio, although its big-ticket items fall in the first quarter, with the Super Bowl and the Olympics in the first quarter and the Spanish-language rights to the World Cup, which kicks off in June 2018.

During the run up to the upfront, there was a fair amount of talk about buying TV time based on data-based targets rather than traditional demographics.

Buyers said that in order to get the smaller increases the volume suggests, they might have to commit to having a percentage of their spending be based on audiences, which opens up more of a network's inventory to top-tier advertisers.

Related: Enabling Audience-Based Buying: Why the Data Behind the Delivery Matters

Wall Street analysts say they’ve noticed a softness in the TV ad market lately.

“1Q TV advertising finished below expectations, weighed down by key categories and less pricing power. With trends similar in 2Q, and what appears to be a slow start to June, there could be advertising/ EPS risk to 2Q and the year,” said John Janedis of Jefferies. “Our ad estimates have been below consensus all year and remain so.”

As for the upfront, “for the most part, we do not think budgets have been registered… though conversations are going,” Janedis said in a research note. “One interesting dynamic will be how networks that are losing distribution will approach the upfront given what will be less programming investment / ratings.”

Jon Lafayette

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.